What is a spike?
Spike is an Error Quote. It may look like this:
Spike is an error quote with the following characteristics:
a) a significant price gap; and
b) in a short period of time the price rebounds with a price gap; and
c) before it appears there is no rapid price movement;
d) before it appears there is no important macroeconomic indicators and/or corporate reports.
Usually a broker gets error quotes from information systems. Error quotes mainly appear because of two reasons:
1. Technical failure.
2. A separate deal, often mistaken, made in the information system. e.g. one of the sellers sells a lot at a price much lower than the current one (e.g. by mistake). One of the buyers buys this lot immediately. Nobody can buy anything at this price any more but as there was a deal at this quote the quote appears in the information system.
On real accounts deals are not executed at the Error quotes. If they are executed they will be annulled and the spike will be deleted from the quotes archive. Deals are not annulled on demo accounts.
